"We have counted about eight civilians so far who were killed in the blast and more than 10 others wounded but the death toll could be higher because the area is a market and it was so densely populated when the blast occurred, most people who were wounded have serious injuries," said police official Ibrahim Mohamed.
Medical sources suggested nearly 30 people had been killed, but this was not confirmed by authorities.
The blast took place in the densely populated Afisiyone area in southern Mogadishu.
"There was chaos and severed dead bodies strewn around the street, the market was so busy with people shopping when the blast ripped through the area. I saw many dead bodies but I could not count, I have helped collect more than 10 of them," said Abdulahi Osman, who witnessed the blast.
Its most deadly recent attack was in August when a car bomb outside a popular hotel close to the presidential palace left 15 dead.
Despite being driven out of the capital in 2011 by an African Union force deployed in 2007 the group still control vast swathes of outlying rural areas from which they launch guerrilla operations.
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